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 Attorney Spotlight |
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Annie C. Johnson
Annie's areas of work include finance, real estate, contracts and corporate law. Annie assists commercial lenders with loan documentation and closing issues and with the drafting of corporate and finance documents. Annie also participates in advising small businesses on regulatory and licensing matters at both the state and federal levels.
Annie is admitted to practice before the Supreme Court of Pennsylvania. She is a member of the American Bar Association, The National Association of Government Guaranteed Lenders (NAGGL), the Independent Community Bankers of America (ICBA) and the Pennsylvania Bar Association.
Annie is a graduate of Northwestern University, where she earned a Bachelor of Arts degree, and the University of Minnesota School of Law, where she earned a Juris Doctor degree, cum laude, and was a member of the Minnesota Law Review.
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BEST PRACTICES: TITLE INSURANCE
By Ethan W. Smith |
When closing loans secured by commercial real estate, most prudent lenders require their liens to be insured by a title insurance policy. However, lenders should be mindful that the mere existence of a title insurance policy does not mean that lenders can put things "on auto-pilot" and relax their obligations of prudent lending. Lenders must always keep in mind that the obligation to act prudently cannot be substituted with a policy of title insurance. Some tips to keep in mind:
- When dealing with a title insurance agent (as opposed to dealing directly with the title insurance company), always obtain a "Closing Protection" or "Insured Closing" letter, addressed to the Lender and referencing the title commitment, the property address and the purchaser/owner of the property. A closing protection letter insures the lender against any malfeasance or defalcation of the title agent or if the agent fails to comply with the lender's written closing instructions. Obtaining this letter is essential to bringing a successful title claim in the future.
- Always obtain copies of documents referenced as exceptions to coverage in the title commitment. The nature of some of these documents is readily ascertainable (i.e., utility easements); however, other documents may have provisions that must be reviewed. If you are uncertain what a particular document is that is being excepted from coverage, a complete copy should be obtained and reviewed to determine what risk, if any, may be associated with accepting the document as an exception to coverage.
- Do not rely on the title agent to obtain payoff letters without reviewing the terms. Many title agents will accept payoff letters that do not contain warranties that liens will be released or that the payoff is a complete payoff of all debts owed. This can be problematic if the lien is cross collateralizing several debts which are not all paid off with the proceeds of your loan. Even if the title insurance company insures over the lien, as a lender, you want to make sure that the other lender releases its lien. Most lenders will not be happy to discover that they do not have a first lien on the property, but have a title insurance claim instead (which claim may be contested by the insurer). Requesting a copy of the payoff letter from the title agent and requiring the letter to unconditionally agree that the lien will be released or satisfied upon receipt of the payoff amount will avoid issues down the road.
Title insurance is a great safety-net for lenders making loans secured by real estate. However, don't be lulled into a false sense of security by title insurance - it can never become a substitute for diligent and prudent lending practices.
For more information on closing loans secured by real estate, please contact the author at esmith@starfieldsmith.com, or 215-542-7070.
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Did you know... |
...that Starfield & Smith, P.C. can provide title insurance in Pennsylvania and New Jersey and can place title insurance nationally through its underwriting networks?
For more information about this and other services Starfield & Smith, P.C. provides its clients, please call Ethan at 215-542-7070 or by email at esmith@starfieldsmith.com.
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Seminars and Events |
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Fundamentals of SBA Lending: Documenting, Closing and Funding the SBA Loan
Date: March 4, 2010 from 1:00 pm EST - 2:30 pm EST
Location: Webinar
SBA lending affords banks and other lending institutions with the opportunity to finance commercial loans to small businesses and, at the same time, secure a 50 to 90 percent loan guarantee from the federal government. While the program can be quite profitable, it's not without its risks. Compliance with SBA regulations is mandatory to ensure success and profitability. With seismic changes occurring to the program over the last several months, it is critical to understand the new regulations and the way to make the SBA loan programs work for you.
Register online by clicking here or call 866-352-9539 Discount code: Z7745121 Priority code: 15000
Closing and Funding the SBA Loan
Presented by: NAGGL
Date: March 8 - 9, 2010
Location: Huntingdon Beach, CA
On March 8 and 9, 2010 at the NAGGL SBA Lender Training Event in Huntingdon Beach, CA, David Starfield will present the 2-day course, "Closing and Funding the SBA Loan." This program is of special interest for all those who prepare loan closing documentation and who coordinate key people and events in the loan closing meeting. Topics will include, SBA standardized loan authorization; SBA closing forms; SBA closing regulations; lender documentation; securing the lender; and much more.
To register online, click here. Advanced SBA Loan Documentation and Closing
On March 10, 2010, at the NAGGL SBA Lender Training Event in Huntingdon Beach, CA, David Starfield will present the "Advanced SBA Loan Documentation and Closing" course. This session is designed to help lenders ensure that the documents they asemble comply with the SOPs, the loan authorization and sound lending practices. Topics will include key loan closing issues; tax, lien and judgment searches; third parties; loan modification issues; and more.
To register online, click here.
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Starfield & Smith, P.C.
Pennsylvania Office
501 Office Center Drive, Suite 350 | Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723
Minnesota Office
1516 West Lake Street, Suite 303 | Minneapolis, MN 55408
Loan Documentation | Closing | SBA Guaranty Repurchase
Regulatory Compliance | Franchise Eligibility
Business Consulting
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